Agilysys(US:AGYS)2025-10-27 21:32Financial Data and Key Metrics Changes - Fiscal 2026 Q2 revenue reached a record $79.3 million, a 16.1% increase from $68.3 million in the prior year [24] - Recurring revenue grew 23% year over year to a record $51 million, driven mainly by a 33.1% increase in subscription revenue [14][24] - Adjusted net income for Q2 was $11.4 million, compared to $9.5 million in the prior year, with adjusted diluted earnings per share increasing to $0.40 from $0.34 [29] Business Line Data and Key Metrics Changes - Subscription sales were up 59% year over year, with food service management (FSM) sales increasing more than two and a half times [7][14] - Property management systems (PMS) products, including add-on modules, saw a 34% increase [8] - Point of sale (POS) products, including add-on modules, increased by 23% [8] Market Data and Key Metrics Changes - International sales grew by 36% year over year, with notable wins in the UK and APAC regions [7][9] - Gaming casino sales were up 15%, despite last year being a record sales year [7] - The total addressable market is significantly larger than the current company size, indicating substantial growth potential [9] Company Strategy and Development Direction - The company is focused on enhancing its cloud-native product ecosystem, which has created competitive advantages in a market lacking innovation [5][6] - AI is increasingly integrated into the business, improving product development and operational efficiencies [22] - The company aims to maintain a clean balance sheet while expanding its market presence in hospitality technology [33] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the business momentum and the impact of AI on competitive positioning [18][32] - The company raised its full-year revenue guidance to $315 million to $318 million, reflecting strong sales momentum [30][31] - Management noted that the Marriott PMS project is progressing well, with beta implementations underway [22] Other Important Information - The product backlog at the end of Q2 was 49% higher than at the end of Q1, providing better visibility for the fiscal year [17] - The company has added 18 new customers in Q2, all of which were subscription-based sales agreements [11] Q&A Session Summary Question: What has changed regarding record sales momentum? - Management attributed the momentum to product ecosystem improvements and increased senior talent, rather than solely market adoption of cloud solutions [36][37] Question: Will the Marriott rollout impact margins? - Management expects the Marriott rollout to be margin accretive over time, with potential short-term investments [38][39] Question: How is international performance compared across regions? - Management noted strong performance in EMEA and APAC, driven by product improvements rather than a halo effect from major projects [44][45] Question: What is the current capacity for service delivery? - Management confirmed that capacity improvements have been completed, allowing for better handling of backlog despite occasional customer delays [47][48] Question: Are larger hospitality players taking notice of the company? - Management confirmed increased attention from larger players, attributing it to product improvements and enhanced sales staff credibility [61][62] Question: Did any customers represent more than 10% of ACV in Q2? - Management indicated that no single customer exceeded 10% of ACV, highlighting a broad-based sales performance [68] Question: How did seasonality affect Q2 results? - Management noted that increased sales capacity and record backlog contributed to less seasonality compared to the previous year [57][58]